Saudi Aramco has signed an agreement with US-based National Oilwell Varco to develop a manufacturing facility for drilling equipment in Ras Al Khair, the companies said in a statement.
Aramco will own 30 per cent of the joint venture's shares with the US firm holding the remaining 70 per cent interest.
The agreement was a step in the direction of procuring "locally manufactured goods and services alongside the development of giga projects such as the King Salman International Complex for Maritime Industries and Services," said Saudi Aramco president and chief executive Amin Nasser.
Aramco, the world's top oil exporting company has prioritised developing local content and manufacturing capacities through its In Kingdom Total Value Add programme, which aims to double the percentage of locally-produced energy-related goods and services to 70 per cent by 2021 and export 30 per cent of the total domestic energy goods and services produced in the kingdom over the same time frame.
The joint venture, on the east coast, not far from the Jubail Industrial City will have the capacity to manufacture 10 onshore high-specification drilling rigs annually. The facility is also expected to have capabilities to supply drilling packages for offshore jack-up rigs, the company said in the statement.
The development follows an earlier agreement signed between Aramco and the Royal Commission for Jubail and Yanbu, a government body that manages free zones to set up two industrial projects in Ras Al Khair.
The commission will allocate two parcels of land to Aramco where it will build an onshore drilling rig facility spread over 500,000 square metres and a casting and forging unit spanning 300,000 square metres. The latter facility will serve the maritime industry and the manufacturing of equipment related to the oil and gas supply chain.
Aramco is the main revenue earner for the kingdom and plans to raise its spending to US$414 billion over the next 10 years, including on infrastructure and drilling, as it moves to new business lines. The new capital expenditure target revealed earlier in December is higher than $334bn announced last year.